On Friday, I was honored to join the all-star cast – including keynoter Lisa Blomgren Amsler, Jackie Font-Guzmán, Susan Franck, Tim Hedeen, Mariana Hernandez Crespo, Jan Martinez, Jackie Nolan-Haley, Jen Reynolds, Colin Rule, Andrea Schneider, Nancy Welsh, and Maureen Weston – at St. Thomas Law School’s Symposium, Dispute System Design: Justice, Accountability and Impact.
I believe that dispute system design is an important part of our field and so I was very pleased to see a symposium on the subject, especially with such thoughtful and respected colleagues. The presentations illustrate how DSD is used in virtually every aspect of life including health care, international trade treaties, natural resource management, recovery from major social conflict, social activism, electronic interactions, arbitration policy development, sports, and even personal relationships, among others.
In this post, I summarize my presentation with preliminary findings from my study on why and how corporations use planned early dispute resolution (commonly known as “PEDR”). I am doing this study with Peter Benner, a Connecticut attorney and mediator. Alert readers of this blog will recall the seven-part series in which Peter and I speculated about why many corporations do not use PEDR systems. Our collaboration on this research grew out of this conversation.
Before I summarize some preliminary findings, let me note some caveats. First, this post doesn’t include all the caveats we will include when we write the law review article for the St. Thomas symposium. We have conducted 12 semi-structured interviews of inside counsel of large corporations, selected through a snowball sampling process. So this is a small non-random sample and one should be careful about making generalizations from this data. We plan to conduct additional interviews and we haven’t fully analyzed the data that we have collected. We haven’t interviewed corporate executives or outside counsel, who presumably have different perspectives (though they are probably much less knowledgeable about PEDR systems). The powerpoint includes only highlights of our findings and it obviously condenses points because of space limitations.
Even so, I am very excited about what we are finding, which I think will provide useful insights and ideas for initiating and operating PEDR programs. My powerpoint summarizes our conclusions so far, which I elaborate a bit as follows.
General Approach, Not a Checklist of Procedures. PEDR is a general approach designed to enable parties and their lawyers to resolve disputes as early as reasonably possible. It involves strategic advance planning for handling disputes rather than dealing with them ad hoc as they arise.
Lots of Variation in PEDR Program Elements. As you might expect, PEDR programs are designed to fit particular needs of each company. Since the companies and personnel vary, so do the configurations of the elements in the programs. Here’s a list of elements in some programs:
- Regular and strategic use of ADR clauses
- Early case assessment and periodic review of cases
- Inside counsel designated as “ADR counsel”
- Training of inside counsel and/or business people
- Written materials about PEDR
- Alternative fee arrangements for outside counsel
- Systematic use of mediation or other ADR processes
- Strategies to change the culture of disputing
Critical Role of Early Case Assessment. Virtually all of the PEDR systems described to us include an early case assessment (ECA) process. Several people emphasized that this is the “heart” of their program. This makes perfect sense since you need to analyze cases early to manage them early. While ECAs are very important, they are not sufficient. If lawyers do an ECA and then ignore them while they handle cases, the ECAs won’t make much difference. Some companies have formal processes for periodic reviews of their cases and others seem to do this informally. CPR developed an “ECA Toolkit,” which includes a long and short form ECA.
Importance of Having an ADR Manager. Many of the corporations designate an inside counsel to oversee the PEDR system, provide resources and training, and be available to give advice. Without someone assigned to perform such functions, these programs can easily be ignored and fade away. Many of the subjects we interviewed were the ADR managers for their systems, though some were the general counsel who championed them in their companies.
Importance of Training. It should go without saying that if lawyers and others are expected to act differently than they are used to, they will need training in how to make the PEDR system work properly.
Importance of Culture Change. Some of our subjects emphasized the great importance of changing the culture of disputing so that the systems are deeply institutionalized. This is important precisely because people are expected to do things differently than well-established norms. This is similar to the importance of culture change in the courts, which the Institute for the Advancement of the American Legal System is advocating.
Genesis of PEDR Systems. Many of the lawyers we talked with developed what we might call Nike PEDR. They just did it in their own cases, often without advance authorization of their superiors. Over time, these systems evolved and became more formalized, and the lawyers enlisted support of the general counsel and top business leaders. In some cases, PEDR systems were the result of conscious and careful system design by inside lawyers along the lines of the ABA PEDR Task Force’s User Guide. Although one might expect that business leaders might initiate such programs (at least in directing the legal department to develop a PEDR program), that wasn’t the case in any of the corporations described to us. And the subjects were very skeptical that business leaders (or outside counsel) would provide the impetus for developing such programs.
Why Corporations Adopt PEDR Systems. Companies have multiple reasons for adopting PEDR systems. Of course, some companies value PEDR “just” to save time and money. For some companies, other interests are as or more important. One motive is to control the disputing process and avoid disputes as much as possible. For example, one subject said, “It’s not our goal to win litigation. It’s our goal not to have litigation.” Of course, they can’t avoid all litigation and many companies use PEDR to carefully manage litigation. Some subjects described a goal of fitting in with general corporate values such as creating value, innovation, cooperation, or efficiency. Others described familiar interests of preserving relationships and reputations, producing fair outcomes, and avoiding bad outcomes.
Survival of PEDR Systems. Several of our subjects had recently retired from the companies where they worked with PEDR systems. We asked if there had been any changes after they left and their responses related to the perspectives of the general counsel or other key figures in charge. Some of these subjects said that they knew that the leadership really believe in PEDR and they were confident that the systems were continuing. Others said that the new leadership had more traditional views and that the PEDR system was discontinued. As long as PEDR is not the norm, such systems are vulnerable to termination upon change in leadership, especially the general counsel.
Watch this space for more discussion of our study.